Audit Finding Components

1. Audit Finding Components • Condition • Criteria/Standard • Effect: Relate to 5 Control Objs. • Cause • Recommendation • Note: Exh. 14-8 is a variation of this model Operational Auditing--Spring 2012

2. Recommendation Considerations • Does it solve the problem? • Is it feasible for the BPO? • Is it compatible with the BPOs ops.? • Is it cost effective? • Is it a long or short-term solution? Operational Auditing--Spring 2012

3. Assessing BPOs Comments • Financial statement assertions • Internal control assertions • See Exhibit 14-4 Operational Auditing--Spring 2012

4. Other Issues-COSO Model • Audit Findings Summary (pps. 14-11 to 14-13) • S-C-O-R-E classification • Impact and likelihood • Flows into Risk Matrix • Supports C3ER model • Note alternative approach in Exhibit 14-12 Operational Auditing--Spring 2012

5. Reporting Standards • Signed written report • Pre-issuance discussion • Clear, objective reporting • Purpose, scope & results required • Recommendations optional • Auditee response optional • Review of report & distribution Operational Auditing--Spring 2012

6. Report Use • Audit Staff • Work summary • Action catalyst • Training • Evaluation • Follow up Operational Auditing--Spring 2012

7. Report Use • Operating Management • Action catalyst • Support • Visibility • Evaluation • Top Management • Visibility • Audit scope • Objective insight Operational Auditing--Spring 2012

8. Closing Conference • Audit review • Major findings • Other findings • Report review logistics • Audit conduct feedback • Thank you’s Operational Auditing--Spring 2012

9. Report Model • Cover • Formalities • Executive Summary • Findings • Major • Other • See summary at 14-22 to 14-23 Operational Auditing--Spring 2012

10. Effective Writing • Gather information • Conversational style • Keep it short & simple • Active voice • Familiar vocabulary • Use captions • Use italics and white space • Use graphics & footnotes Operational Auditing--Spring 2012

11. Other Reporting Issues • Interim updates • Distribution • Audit Committee • Senior Management • Department Management • Internal Audit • External Audit Operational Auditing--Spring 2012

12. Auditor Follow-up Role • Timely review • Share the results • Respect BPO’s input • Minimize BPO interference • Emphasize preventative cost of quality Operational Auditing--Spring 2012

13. Auditor Follow-up Sequence • Read BPO’s response • Discuss response with BPO • Consider “give-away” items • Conduct on-site reviews • Reassess the risk • Report Operational Auditing--Spring 2012

14. Win-win Considerations • Do not force preferences • Focus on the what not the how • Avoid operations abandonment • Know when to hold them and when to fold them • Never attack individuals • Resolve verbally first Operational Auditing--Spring 2012

15. Audit Evaluation • General description • What worked • What did not work • Recommendations Operational Auditing--Spring 2012